The Financial Services Authority (FSA) has fined Nestor Healthcare Group Nestor) £175,000 for failing to take adequate steps to ensure that its board members and senior executives complied with the share dealing provisions of the FSA's Model Code.
Nestor had a policy on how senior Nestor staff intending to trade in the company's shares should obtain clearance to deal.
The FSA has found that the breaches occurred principally because Nestor's weak procedures allowed for this policy to be forgotten by the board.
This, with other factors, led to purchases of Nestor shares by board members being carried out in breach of the Model Code, which lays down minimum procedural standards.
In the period 18 October 2006 to 30 June 2010 Nestor was listed on the Main Market of the London Stock Exchange.
Under the listing rules, Nestor was required to take all proper and reasonable steps to secure the compliance of its persons discharging managerial responsibility with the Model Code.
Throughout this time Nestor did not issue any reminders about its own share dealing rules (which largely reflected the Model Code), review them or identify that breaches of the Model Code had occurred.
Nestor employed an informal approach to granting dealing approval and largely relied on the experience and knowledge of its directors to ensure that the appropriate compliance was met.
This approach was inadequate and contributed to the company's failings, the FSA said.
David Lawton, the FSA's director of markets, said:"The Model Code is fundamental in helping directors and senior executives protect themselves against suspicion of abusing inside information.
"Regardless of their size, the FSA expects listed companies to meet their obligations under the listing rules and listing principles and ensure that the Model Code is complied with at all times.
"Nestor's own share dealing policy fell by the wayside, which the FSA regards as unacceptable. Listed companies should ensure their practices in this area are fit for purpose."
Nestor agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30% discount on its financial penalty. Were it not for this discount the FSA would have imposed a financial penalty of £250,000 on Nestor.
The FSA does not allege that any of the dealings referred to in its final notice were based on inside information.
Annuity market worth £4bn in 2017
For ‘distress’ caused
Oversees £30bn of advised and D2C assets
Less than a third of top paid employees are women
£1bn business since inception